July 29, 2020

The new way of small business: Are you ready?

As we face an uncertain future, there are new approaches to business success.

Small businesses are emerging from COVID-19 lockdown into a new world – and an uncertain future. Deloitte’s Andrew Culley and NAB’s Ana Marinkovic look at lessons learned and opportunities ahead.

At first, it was about one thing: survival. Now, as the initial shock of COVID-19 subsides, business owners face a longer-term challenge: continuing to operate in a radically different world.

The move to online

One example of this new world? The flight to doing business digitally.

In the first eight weeks of the pandemic, that flight saw Australia Post record an 80 per cent increase in ecommerce. For NAB, it meant an 800 per cent year-on-year increase in the number of new merchant facilities opened in April.

“The April NAB Online Retail Sales Index saw an increase of 16.2 per cent,” says Ana Marinkovic, Customer Executive of Business Direct and Small Business at NAB. “That’s the highest monthly growth rate since the Index was launched in 2012. This is very significant.”

“Businesses that have survived the crisis phase have come a long way in a very short time,” agrees Andrew Culley, Managing Partner at Deloitte Private.

An obvious change, he explains, was how the use of technology accelerated as people recognised the need to communicate with customers in different ways, offer them ecommerce solutions and ensure employees could work from home. Another effect of the shift to digital has been the rapid decline of cash, now at 27 per cent of spending, according to the most recent RBA report.

“The Department of Health recommended shoppers use tap and go instead of cash where possible to help curb the spread of COVID-19,” says Marinkovic.

“We even saw some retailers refusing to take cash, so it’s not surprising that more people are using cards or shopping online. It will be interesting to see if consumers continue to favour cashless payment options.”

Build trust, win business

This shift in buying habits has triggered a major change in how customers interact with businesses, and, online or offline, trust is paramount.

To build that, Culley says businesses need to stay on top of government regulations, stick to the rules as they evolve and make it clear they’re doing everything they can to protect the health of customers and staff. Consumers will reward businesses that build trust by doing what they can to implement safety measures and prioritise the relationships they have with customers and employees,” he adds.

Leveraging the lessons learned

Culley is optimistic that businesses have learned important lessons to help them thrive through the recovery phase, including:

  1. A tighter grip on cash flow
    Businesses have been working very closely with their bankers and accountants to ensure they’re make the most of government grants and other entitlements associated with COVID-19.“A lot of businesses we’ve seen have learned good discipline in managing their cash position,” Culley says. “The enforced vigilance has given them a much better handle on their cash flow models, what drives their income and the nature of their outgoings. They have also been forced to think a lot more deeply about business continuity and risk management. This could include holding more working capital, improving liquidity and maintaining tighter control of accounts receivable.”
  2. Rethinking international partnerships
    COVID-19 also shone a spotlight on the risks of international partnerships.“We’ve seen widespread quarantines and factory closures, particularly in Asia, seriously disrupt elements of the global supply chain,” Culley says.“This forced business owners to reconsider how and where they source their goods and materials. Also, the ‘just in time’ approach, that makes financial sense when things are running smoothly, meant that many businesses ran out of stock very quickly. Business leaders need to consider ways they can build resilience into the system to protect them against future shocks.”
  3. A flexible mindset
    COVID-19 forced many businesses to adapt to survive. “Businesses need to maintain that agile mindset as we move into the next phase,” Culley says.And with no clear idea of how long recovery is going to take, conventional planning has been turned on its head.“You can’t make plans for the next two or three years – but you can put iterative plans in place,” Culley says. “Plan with some milestones in mind then, when you get to the next hurdle, you can think again in the context of the latest developments.”Of course, these options won’t work for every business. “Critical elements of business success have been put to the test and lots of organisations have been able to work through,” Culley says. “But I think it’s important to acknowledge that others haven’t, and often for very good reasons. It’s hard to be flexible and strategic when revenue falls to zero.”
  4. An opportunity to rethink
    Iterative thinking can also open the door to more significant change.Deloitte has produced a new workbook, COVID-19 Small Business Roadmap for Recovery & Beyond, to help small business owners reflect on, restart and revitalise their business. It stresses that, at each milestone, businesses should not be afraid to abandon what may have been right previously but is no longer right for now.“The workbook encourages the iterative approach,” Culley says. “It allows you to consider what you did well, what you can learn from that and what you can take forward to the next phase.”“Many businesses are seeing the impact of COVID-19 as an opportunity to look for new and more effective ways to operate,” agrees Marinkovic. “I think we should expect to see many of them revising, or even rewriting, their original business model to reflect the real environment that is business today.”
  5. A greater use of ecommerce
    COVID-19 saw some retailers try ecommerce for the first time; others embraced an opportunity to expand their online presence. Recognising such rapid change presents challenges, NAB has launched a Small Business Hub to help small businesses take advantage of this huge shift to digitisation.“The hub provides support including tools, offers and advice,” Marinkovic says. “We’re aiming to help small businesses accelerate their transition to an online business model or grow their existing online business. The hub will also help small businesses respond to and leverage the new behaviours and habits we all adopted during the pandemic.”
  6. An evolved relationship with your people
    From the initial crisis response to the easing of restrictions in some states, the most successful businesses have been those able to bring their teams along on the often-difficult journey, Culley says. Adversity, he adds, can be an opportunity to build long-lasting and deep relationships with your people.“Now it’s time to look closely at your people’s skills, what they bring to the business and how they can best support what you’re trying to achieve,” he says.“And, given the continuing rate of change, regular and open communications remain crucial. Your staff need to know exactly what’s expected of them at every step so you can work together to identify and take advantage of emerging opportunities, and ultimately protect and grow your business.”


Ana Marinkovic – Making the most of holiday trading

Ana Marinkovic – Making the most of holiday trading

29 November 2023

The holiday season shopping flurry can offer some small businesses the opportunity to prosper… and others a time to take stock for the new year. Both call for careful preparation – particularly in the current environment. NAB Executive Small Business Ana Marinkovic shares her top tips.

Ana Marinkovic – Making the most of holiday trading